National Alliance on Mental Illness
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June 18, 2002

Final Regulations on Medicaid Managed Care Issued

On June 14, the Centers for Medicare and Medicaid Services (CMS) released final regulations governing state Medicaid managed care programs. These revised final rules are very similar to draft regulations put forward in August 2001. They are intended to set forth binding standards for states that require Medicaid beneficiaries (including children and adults with severe mental illnesses who are SSI eligible) to enroll in managed care plans. These standards include access to specialists, coverage of emergency care, grievance procedures, binding external appeals and patient-provider communications. The final rules also include revised provisions restricting managed care plans from marketing of other insurance products by telephone and door-to-door.

These Medicaid managed care regulations were originally authorized by Congress as part of a 1997 law that allowed states increased authority to enroll Medicaid beneficiaries in managed care plans - and "behavioral health carve-out" plans that manage mental illness treatment. Since 1998, the number of Medicaid beneficiaries in managed care plans has increased significantly to 22 million people, or 58% of Medicaid enrollees. Medicaid managed care plans must begin complying with the rules by August 2003 at the latest.

The final regulations contain few major changes from the August 2001 draft. Among the changes that were made from last year's draft are new standards governing expedited grievance processes that all Medicaid managed care plans must have in place for beneficiaries whose life or health is in jeopardy. The revised final rules would require such grievances to be resolved within three working days, with the possibility that plans could receive two-week extensions. A previous proposal put forward in the final days of the Clinton Administration would have required such appeals to be heard within 72 hours. In non-emergency grievances, beneficiary appeals would have to be resolved within 45 days (up from the 30 days in the original draft rules).

NAMI will continue to monitor implementation of these new final regulations to ensure that states, and the Medicaid managed care plans they contract with, protect the rights of children and adults with severe mental illnesses. For further information, see NAMI's comments on the proposed revised Interim Final regulations.

See the full text of the Medicaid Managed Care Regulation and also